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TMI Blog2014 (4) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in sustaining the disallowance and the addition sustained by him is deleted. The ground raised by the assessee is allowed. - ITA No.4861/MUM/2011 - - - Dated:- 19-4-2014 - SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER For The Appellant : Ms. Aarti Vissanji For The Respondent : Shri Sanjeev Jain ORDER PER I. P. BANSAL, J.M: This is an appeal filed by the assessee. It is directed against the order passed by Ld. CIT(A)-27, Mumbai dated 3/3/2011 for assessment year 2007-08. The grounds of appeal read as under: The learned Assessing Officer and the learned Commissioner of Income-tax (Appeals)- 27 erred in disallowing loss of ₹ 62,67,308/- incurred on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, Ld. CIT(A) held that out of total loss ₹ 98,85,546/-, the assessee is entitled to get benefit of ₹ 36,18,238/-. According to Ld. CIT(A) the contracts pending for settlement as at the end of the year were entered to hedge the assessee s risk for foreign exchange fluctuation in respect of import and export of diamonds, which is assessee s business. The assesee is not dealing in foreign exchange, therefore, it cannot revalue foreign exchange at the end of the year and assessee can revalue only in its given business which became ascertain to say the liability and such liability not being ascertained liability at the end of the year cannot be allowed as business loss. Accordingly, part addition to the extent of ₹ 62,67,308 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7095/mum/2012 order dated 12/2/2014 4. On the other hand, Ld. DR relied upon the order passed by Ld. CIT(A). 5. We have heard both the parties and their contentions have carefully been considered. The assessee has demonstrated that forward contract of foreign exchange were entered into by it in regard to its activity of import and export of diamonds. If such is the position then the issue will be covered in favour of the assessee by the aforementioned decisions which have been relied upon by Ld. AR. In the decision in the case of ACIT vs. S.Rajjiv Co.(supra) in which one of us (A.M) is a party. The question raised before the Tribunal by the Department was as under: 1. Whether on the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed as business loss in view of the binding High Court or Tribunal decisions/judgments in the case of D Kishare Kumar and Co (supra) Badridas Gauridu Pvt Ltd (supra), Saaroj Muill Magarmull (supra), etc Thus, loss arising from cancellation of the matured contracts is alto wee in favour of the assessee Thus, this part of the ground of the assessee is allowed. 5 Further, we find that this issue has also been decided by the Special Bench of the Tribunal, Mumbai Bench, in DCIT v/s Bon Bahrain (supra) wherein the Tribunal, while holding that Mark to Market losses in respect of forward foreign exchange contract debited to Profit Loss account is an allowable deduction on the following reasoning:- i) A binding obligation accrue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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